Enron Corp.’s former top investor relations executive pleaded guilty Wednesday to a securities fraud charge.
Mark Koenig, 49, pleaded guilty to one count of aiding and abetting securities fraud, which carries a maximum penalty of 10 years in prison. He had pleaded innocent earlier Wednesday.
In a related civil action brought by the Securities and Exchange Commission, Koenig agreed Wednesday to turn over to the government $1.49 million in forfeited assets and civil penalties and cooperate with government investigations.
As the head of investor relations, Koenig worked with former Enron founder Kenneth Lay and former CEO Jeffrey Skilling, serving as the company’s main link to investors and analysts. He oversaw the company’s earnings announcements exercises which proved fraudulent and coordinated analyst conferences.
The criminal complaint against Koenig alleged that he participated in and knew about efforts on the part of senior Enron management to fool investors into believing the company was more financially healthy before it collapsed in scandal in December 2001. Lay, Skilling and former chief accounting officer Richard Causey face similar charges, and all three have pleaded innocent.
Specifically, federal prosecutors say Koenig knew that Enron masked losses by its defunct retail energy unit Enron Energy Services by folding it into the division that included the company’s trading unit. The government also alleges Koenig participated in misleading analysts about profits in Enron’s former Internet unit, Enron Broadband Services, when that unit never earned a dime. Both units went bankrupt along with the parent.
Those allegations overlap with some of the pending charges against Lay, Skilling and Causey.
The broadband allegations also overlap with pending charges against six former broadband executives slated for trial in October. The former CEO of the broadband unit, Kenneth Rice, pleaded guilty last month to securities fraud for participating in a scheme to tout Enron’s broadband network as having capabilities it didn’t have to impress analysts and inflate company stock.
Koenig’s appearance in court came about three months after Enron’s former No. 2 investor relations executive, Paula Rieker, pleaded guilty to an insider trading charge and agreed to cooperate with prosecutors.
Koenig joined Enron in 1985, when the company was formed by a merger of Houston Natural Gas and Omaha’s InterNorth. He was treasurer but switched to investor relations seven years later and stayed there until left Enron in 2002.
Rieker, his former second-in-command, pleaded guilty May 19 to exercising options to buy stock on the cheap and sell it on the open market for nearly $630,000 after learning internally that the broadband unit lost more than $95 million in the second quarter of 2001. The company had said earlier that year that the unit would lose about $65 million throughout 2001, so actual losses far surpassed guidance provided to financial markets.
Rieker answered to Koenig, and was responsible for preparing press releases about earnings and scripts for quarterly earnings conference calls with analysts. She left that post in September 2001 to become corporate secretary. She remained in that role until May 5, when she resigned after her name surfaced as a target in the Justice Department’s Enron investigation.